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Gov. Jennifer Granholm signed a bill into law yesterday to significantly raise the state's minimum wage.

The wage will be hiked to $6.95, effective Oct. 1. It will climb to $7.15 in July 2007. The final increase to $7.40 is slated for one year later.

Michigan has not increased its minimum wage since 1995, when it adopted the lowest federally required wage of $5.15.

About 600,000 Michigan workers will benefit from the wage increase, said Sharon Parks, vice president for policy at the Michigan League for Human Services, a non-profit organization that advocates for Michigan's low-income citizens.

Parks said the increase is a "significant step forward" for improving the economic situation of families that depend on minimum-wage earners.

But critics say the higher wages will result in fewer jobs.

Scoopers at the Ben and Jerry's ice cream store on in downtown Ann Arbor make $6.50 an hour plus tips, a wage that will be affected by the new legislation.

"We'll probably use less labor," owner Mark Prince said.

The Raise the Wage Coalition collected more than 5,000 signatures since January.

LSA senior Ryan Bates is credited with mobilizing the movement to raise the minimum wage on campus. His impassioned plea at the year's first College Democrats meeting convinced the group to join the coalition, said Peter Borock, a member of the College Democrats executive board. Bates introduced the petition to several campus groups, including Students Organizing for Labor and Economic Equality, Student for Public Interest Research Group in Michigan and the Michigan Progressive Party.

All politics set aside, "this was definitely a victory," Bates said. "People seemed to understand raising the minimum wage is a basic issue of justice."

An alternate means to the campaign's goal was giving state residents the choice to vote on raising the minimum wage in an initiative on November's ballot. The initiative would was expected to pass. It would have tied minimum increases to inflation, a provision not included in the bill Granholm signed.

Some are concerned that wage hikes would make it difficult for employers to hire as many workers. Teenagers are most likely to suffer because of the new wage, according to Rebecca Blank, dean of the Ford School of Public Policy.

Blank served as an economic adviser to former President Bill Clinton from 1997 to 1999.

Blank said she is happy to make the trade-off to benefit adults who earn the minimum wage even if it means losing some teenage workers.

One legislator disagreed.

"I really think it will (negatively) affect more adults than it will teenagers in our business," said State Rep. Lorence Wenke (R-Kalamazoo).

Wenke owns Wenke Sunbelt Greenhouses, making him the largest employer in the Legislature.

Wenke said $5.15 is too low but $7.40 is too high.

"As we so often do in government, we've gone from one extreme to the other," Wenke said. "That's just what business people hate - sharp increases."

Many legislators expressed concerns about putting an initiative on the ballot.

"To put minimum wage in the constitution would be a big mistake," Wenke said. "The constitution should be reserved for fundamental principles, not public policy."

Bates said Republicans reluctance to amend the constitution reflected a double standard.

"The right wing thinks it is OK to put reactionary dogma in the constitution, such as gay marriage restrictions, but they don't believe workers' rights are OK to put in," Bates said. "That is two-faced."

The legislative version of the wage adjustment is far less egregious to the economy than the ballot proposal would have been, said Sen. Mike Bishop (R-Rochester). Bishop said it was the responsibility of the legislators to respond to their constituencies, which had widely supported the petition drive.

Some have speculated that Republicans passed the legislation so that the issue would not appear on November's ballot, which would have brought more Democratic voters to the polls.

Yesterday's legislative action "took the wind out of their sails," Bishop said.

The Democrats' motivation, Wenke said, is similar to Republicans putting proposals to legalize gay marriage on ballots in several states during the 2004 election.

Including gay marriage on the ballot served as a calling to all conservative voters. Without the proposals, President Bush may not have won the election, Wenke said.

There are two distinct drawbacks to the increase in minimum wage, Wenke said.

First, Michigan will be less hospitable to out-of-state businesses. Entrepreneurial advances in Michigan may begin to decline because other states have a minimum wage much lower than ours, he said.

There will also be an upward pressure on all wages because higher-paid workers may demand raises, Wenke said. This second effect is harder to measure, but just as important, he said.